Commentary: Internet access is spreading prosperity to rural India

 By Andy Mukherjee Bloomberg News
 Wednesday, February 23, 2005

Sunil Bharti Mittal, chairman of India's second-biggest mobile phone network, says fishermen on the nation's southern coast are using cellphones while at sea to call traders and find out who's paying the most for lobsters. He is planning to stop that.

Instead, Mittal's company, Bharti Tele-Ventures, will offer the fishermen a wireless Internet service that would provide up-to-date prices for their catch and even allow them to book orders from their boats. In so doing, the fishermen "will significantly increase their earnings," he says.

Fishermen are not the only ones on Mittal's radar screen. In the next 12 months to 24 months, he plans to introduce technology that will enable farmers to monitor weather conditions in real time on their mobile phones, Mittal said at an Ernst & Young conference in Singapore last week.

The abysmal lack of communication facilities in rural areas has been, until now, a source of some satisfaction to those who believe that by progressively opening up the industry to private and foreign investors in the past decade, India has only looked after the interests of privileged city dwellers.

The naysayers, prominent among them the Indian Marxists who opposed the government decision this month to allow foreign investors to raise their stakes in telecommunications companies to a maximum of 74 percent, from 49 percent, should take notice as benefits of greater competition begin to flow to the remotest regions - with private investors' money and not government subsidies.

Reliance Infocomm, Bharti's bigger rival by subscribers, recently announced that by the end of this year it would provide voice, data and video access to 650 million Indians across 400,000 villages and 5,700 cities and towns. Reliance, which has 10.5 million subscribers, calls this an attempt to bridge India's "digital divide."

Only 1.5 percent of people in rural India have access to telephones, compared with 25 percent in cities.

A glut in global bandwidth is helping to spread connectivity to rural India. In partnership with Singapore Telecommunications, Mittal has set up the world's biggest privately held undersea cable by capacity - an 8.4 terabit-per-second line joining India to Singapore.

Reliance Infocomm, a unit of the country's biggest nonstate company, bought international capacity last year by acquiring the network of the Bermuda-based Flag Telecom Group, which came out of bankruptcy protection in 2003.

In November, Videsh Sanchar Nigam, an Indian long-distance phone company owned by the Tata group, announced its decision to buy Tyco International's undersea cable network for $130 million.

There is suddenly more bandwidth going around at home, too. Bharti has laid down more than 30,000 kilometers, or 18,645 miles, of fiber-optic cable across India; Reliance has installed about 128,000 kilometers.

Some of the growth in capacity is helping India's computer software and call-center industries satiate their appetite for voice and data transmission. Some of it is being used by Indian companies as they modernize. For example, banks need bandwidth to run their ATM networks; fleet operators need it to track the movement of their trucks.

Capacity that is left over is allowing individual consumers in the world's second-fastest growing major economy after China to get affordable access to phone and wireless Internet services. In 1995, mobile tariffs in India averaged 46 U.S. cents a minute; they're down to 2 cents a minute now.

India has 49 million cellular users, according to the phone-services regulator.

Bharti began a broadband Internet service for $11 a month in northern India last month. The price is competitive by global standards: America Online offers broadband for $14.95 a month.

Indian broadband prices will fall as competition increases. That will bring high-speed data transmission within reach of more Indians - not just in urban areas and not only for entertainment.

"Broadband isn't about electronic games or video streaming," Sam Pitroda, a member of the government's National Advisory Council, said at a conference in New Delhi in October. "For India, it means e-governance and e-education."

Village accountants in the southern province of Karnataka, whose capital, Bangalore, is now globally known for its software exports, are using handheld computers to capture crop patterns, reducing the time the government takes to collate such information to 30 days from one year.

As connectivity spreads, updated land records, which farmers need to get bank loans, can be accessed via the Internet. Farmers can access the records without having to bribe anyone.

Broadband has been modestly defined by the Indian telecommunications regulator as any "always-on" connection that offers an Internet download speed of at least 256 kilobits per second (kbps). Western consumers, increasingly used to accessing information at eight times that speed or faster, might balk at such a slow service. For India's fishermen, it's likely to be worth the wait as their productivity and earnings rise.